Imagine if four CEOs of America's biggest companies—for the sake of argument say Steve Ballmer of Microsoft, Mike Duke of Walmart, Jeff Immelt of General Electric, and Rex Tillerson of Exxon-Mobil—were all charged with serious crimes, with three of them actually going to prison. Imagine the media handwringing and teeth-gnashing over the ethical state of corporate America such scandals would inspire, as well as the rush by business schools to upgrade business ethics courses.
Of course, not a one of these four gentlemen is on trial. All four are widely admired as business leaders.
But there is, in fact, one business sector that earns more than $40 billion a year, with revenues 50 percent greater than those of Microsoft or Intel, with just such a scandal. Four leaders of this sector have been charged with serious crimes, one of them utterly disgraced, three others going to prison. And this has happened without media wrap-ups and broad, widespread re-examination of the ethics of their profession.
I am talking, of course, about the trial bar.
Exhibit A is John Edwards.
Of course, a North Carolina jury declared a mistrial over the verdict on the former senator and presidential candidate, acquitting him on one count and deadlocking over five others. But Edwards did insert himself into presidential politics, making an uxorious show of fawning over his wife, all the while knowing that his life and campaign were a time bomb. In short, he was unmasked as a man who grotesquely jettisoned any concern for the public. While most Americans know him as a politician, Edwards was once one of the nation's foremost trial lawyers, famed as a seducer of juries.
So, too, was Richard "Dickie" Scruggs—long styled the "King of Torts"—who was convicted in 2008 for attempting to bribe a judge with $50,000. The judge who sentenced him to five years in prison, after listening to secretly recorded conversations, said, "It made me think perhaps this was not the first time you did this because you did it so easily. And there is evidence before the court that you have done it before."
Mel Weiss, who was once recognized as the "King of the Plaintiffs' Securities Bar," was sentenced in 2008 to 2 1/2 years in prison for illegally paying clients to file shareholder suits.
Then there is Bill Lerach, whose name was synonymous with class-action investor litigation, who went to prison after pleading guilty in 2007 to a $251 million client-kickback scheme.
These high-profile cases reveal a very public breakdown in the ethics of a profession. Why is this happening?
One reason is an administrative rule change in class-action lawsuits. Before this change, you had to affirmatively seek to join a class-action lawsuit. In recent decades, such suits have been "opt out," meaning that you can be enlisted into a lawsuit as plaintiff without your knowledge, and even against your will. Lawyers can now dragoon armies of plaintiffs to intimidate defendants into settling meritless cases.
Cultural change is also to blame. Many law school students graduate with the belief that our adversarial system gives them license to win at all costs. Congress and state legislatures—populated by lawyers—are ever busy creating new causes of action. Lawsuits driven by contingency fees, with limitless potential to win punitive damages, have turned lawsuits into arbitrage. In fact, thriving investment firms now invest in lawsuit shares as if they were futures.
It wasn't always so.
Up until the mid-20th century, American lawyers did not see themselves as pure engines of profit. They saw themselves as officers of the court who might flex sharp elbows, but wouldn't stoop to win. Most of all, they saw themselves as the gatekeepers of the law.
"Discourage litigation," said one Illinois lawyer named Abraham Lincoln. "Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser— in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough."
What would Lincoln have made of class-action lawyers today who engage in lawsuit arbitrage, or those who troll local restaurants looking for easement issues under the Americans with Disabilities Act to extract easy payments from mom-and-pop operations?
"Never stir up litigation," Lincoln said. "A worse man can scarcely be found than one who does this. Who can be more nearly a fiend than he who habitually overhauls the register of deeds in search of defects in titles, whereon to stir up strife, and put money in his pocket? A moral tone ought to be infused into the profession which should drive such men out of it."
This is, perhaps, the true indictment of the profession today. What will it take for the media and the law schools to pay attention?